Everywhere you look these days you hear an ongoing debate over a simple app known as “Uber.” The concept is simple: the San Franciso-based company provides an app that connects passengers with “for hire” vehicles and rideshare services via their cell phone. Pricing is handled through Uber on a distance or time basis.
During times of peak demand, the price can be several times normal taxi rates. At other times, Uber may cost less than a regular cab. The goal is to provide a functioning market within the app whereby users can always receive prompt service.
New Orleans could certainly benefit from Uber. Almost everybody has tried in vain to get a taxi on, say, New Year’s Eve. During major holidays and events, even the larger and more well-established cab companies are rapidly overwhelmed as drivers stop responding to most requests from dispatch. Cab drivers understandably choose to seek out low-hanging fruit (i.e., fares from the Convention Center or French Quarter) and some parts of the city don’t receive service.
It’s a matter of supply and demand. The tight regulation of Certificates of Public Necessity (CPNCs) results in an artificial shortage of cabs during peak demand.
The reaction from city officials to Uber was both swift and predictable. This past October, Taxi Bureau Director Malachi Hull issued a “Notice to Cease Unlawful Transportation Operations in the City of New Orleans,” accusing Uber of “illegally advertising for drivers, advertising for riders, and/or facilitating for hire and courtesy transportation in the City of New Orleans.”
Of course, Uber doesn’t actually operate in New Orleans – yet. Hull’s missive was a preemptive strike.
Uber is used to making waves in the cities where it expands. In May 2011, Uber received cease-and-desists letters from the San Francisco Municipal Transportation Agency and the California Public Utilities Commission alleging that it was illegally operating a taxi dispatch and a limousine dispatch, respectively. In 2013, an agreement was finally reached for Uber to operate legally in California.
The process has repeated itself in several other cities. In Washington D.C., for example, an Uber driver’s car was impounded in early 2012 and Uber was accused of operating illegally. Within a few months, the D.C. city council voted to legalize Uber.
In other cities Uber’s legality remains in doubt. Uber was forced to suspend its taxi service in New York following pressure from the Taxi and Limousine Commission. Other cities have gone beyond exerting pressure. Vancouver formally charged Uber with violating 25 municipal regulations, including the operation of an unlicensed taxi and limousine service.
Of course, one might say Uber invited controversy before because, you know, it had actually offered services in those cities.
“To receive a cease-and-desist letter from a city in which the service wasn’t even available, it’s a little confusing to see something like that,” Uber spokeswoman Nairi Hourdajian told Gambit in its recent piece on the issue.
For his part, Mayor Mitch Landrieu told Gambit that he is “way open” to Uber, but emphasized that he’d need go deeper into the regulatory scheme before speaking further. Landrieu acknowledges responsibility for the cease-and-desist letter, but insists that it was sent during an ongoing fight with the taxi lobby and that he did not threaten a lawsuit.
“Uber showed up somewhere and said something, sent them a letter and they asked them the wrong question and my guy said cease-and-desist,” Landrieu explained.
The issue of New Orleans’ current regulatory scheme for taxis and for hire vehicles really is the issue here. New Orleans’ regulations in this area tend to be as onerous as they are out of date. They are also frequently unenforced.
Take the pricing regulations for limousines and luxury sedans. Under Municipal Code Section 162-841, the rate for limousines must be between $40 and $65 per hour with a three hour minimum. For luxury sedans, the rate must be between $35 and $50 per hour.
These rates are unrealistic and limousine companies tend to avoid them through creative pricing schemes (or by simply ignoring them outright). For example, limo companies don’t tend to apply the rates to “super stretch” limos, SUVs, limousine SUVs, luxury buses – basically any type of vehicle arguably not covered by the generic terms of “limousine” or “sedan.”
Other times limousine companies use “packages” to drive up rates, or substantial surcharges for fuel or additional passengers.
Ultimately, the current for hire regulations are a farce. To the extent Uber is a threat to them, the regulations should fall. Although some would depict existing laws as designed to protect consumers, they are, in reality, outdated protectionist measures that keep consumers under-served. Uber is trying to fill a void that desperately needs to be filled.
Landrieu claims that he is open to Uber. Time will tell if he sides with consumers and a commonsense innovation, or with entrenched interests and a mindless bureaucracy.
Owen Courrèges, a New Orleans attorney and resident of the Garden District, offers his opinions for UptownMessenger.com on Mondays. He has previously written for the Reason Public Policy Foundation.